Thrifty Loans

Despite the recent fall in the Bank of England’s base rate, home repossessions are expected to hit a 12-year high this year. The number of homes expected to be taken away from their owners is forecast to reach 45,000 in 2008.

The forecast also came in spite of figures showing that the 21% rise in repossessions in 2007 was less than had been expected. Last year the number of homes repossessed was 27,000, 10% less than the forecast figure of 30,000.

Nevertheless the figure is over 100 homes being taken back by banks and building societies every day, and it amounts to one in every 400 home owners. The figures come from the Council of Mortgage Lenders (CML), which forecasts that these numbers will rise as the credit crunch continues to take its toll on people’s ability to keep up with their monthly mortgage repayments.

There is an increasing number of lenders who are unwilling to provide loans to those with poor credit history, which is likely to mean that many people will find their debts too much to handle. Although the CML forecasts repossessions to reach 45,000 this year, that number is still well below the count of 75,000 in 1991.

Other figures revealed that just less than 16,000 households had been unable to pay their mortgage for more than a year, a 6% rise in six months.

The Ministry of Justice says that the number of repossession orders – which start the process – went up by 7% in the last quarter of 2007 compared to the same period the previous year.

Howard Archer, economist at Global Insight, said: “The financial pressure on many home owners is increasing, and it seems certain that repossessions will trend up significantly during 2008, particularly if the economy suffers an extended market slowdown and unemployment starts rising.”

It is thought that last week’s base rate cut will benefit only a few, with so many on fixed rates.

Adam Sampson of the charity Shelter, said: “Far too many hard-working families are now struggling to pay their mortgages and stay afloat while the Government allows them to flounder.”